Loss on diesel sale mounts to Rs 19.26 per litre

Sources said if prices are not hiked, the government will have to come up with other ways to compensate the oil marketing companies for their losses.

For now, the oil companies are resorting to short term borrowings to meet their working capital requirements. Their combined borrowing have touched Rs 1,40,000 crore (Rs 1,400 billion) as against Rs 1,10,000 crore in January this year.

Over the last one year, their interest costs have more than doubled to Rs 10,500 crore (Rs 105 billion) from Rs 5,100 crore (Rs 51 billion) in 2010-11.

Loss on diesel sale mounts to Rs 19.26 per litre

The Oil Ministry wants the Finance Ministry to release cash subsidy for first quarter quickly to tied over the crisis.

The three firms reported a combined revenue loss of Rs 47,811 crore (Rs 478.11 billion) on fuel sales in the first quarter. Of this, upstream firms like ONGC made good Rs 15,061 crore (Rs 150.61 billion) by way of discount of crude oil they sell to them.

The ministry sought cash subsidy for the remaining Rs 32,750 crore (Rs 327.5 billion) but the Finance Ministry has not released any.

Oil firms would most likely post net losses even in the second quarter as the logjam in Parliament over coal block allocation has meant that supplementary demands for grants are not approved and no subsidy payout is possible till the next winter session of Parliament in November/December.